We apologize for the delay in publishing tonight. We had a family medical emergency and Erin was also traveling home from a short vacation. Everyone is fine, but prayers are always appreciated. Our comments will be brief.
The market had a strong day, but it ended on a negative note as it took back the gains acquired in the late afternoon. The 5-minute RSI is negative, but rising again. The 5-minute PMO had a negative crossover to finish the day which isn't particularly encouraging.
The DecisionPoint Alert Weekly Wrap presents an end-of-week assessment of the trend and condition of the Stock Market, the U.S. Dollar, Gold, Crude Oil, and Bonds. The DecisionPoint Alert daily report (Monday through Thursday) is abbreviated and gives updates on the Weekly Wrap assessments.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MAJOR MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one of 11 major sectors. This is a snapshot of the Intermediate-Term (Silver Cross) and Long-Term (Golden Cross) Trend Model signal status for those sectors.
RRG® Chart: We are using the $ONE benchmark.
Daily: The short-term RRG shows no sector with a bearish southwest heading. Even Energy is beginning to move northward. Other than Energy, all sectors have bullish northeast directions; although XLP is turning over in the Leading quadrant.
Weekly: The weekly RRG on the other hand is mostly bearish, but improving. With the exception of XLB, XLP and XLE, all other sectors are curling back around toward the Improving quadrant. Overall they are still underperforming by a mile as they are situated firmly in the Lagging quadrant or at best, the Weakening quadrant. We do note that XLC and XLV are showing a slight bullish northeast heading.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 1/21/2022
LT Trend Model: SELL as of 5/5/2022
SPY Daily Chart: Price is now testing the top of the short-term falling wedge and is making its way up to the top of the declining trend channel. The RSI is negative, but rising slightly. The PMO is on a BUY signal and is still rising, but mostly flat. The VIX has moved back above its moving average on our inverted scale which implies some internal strength.
Stochastics are rising in positive territory.
Big News! Carl Joins the FREE DecisionPoint Trading Room!
The DecisionPoint Show on StockChartsTV is undergoing changes. We will now be rebroadcasting our FREE DP Trading Room on StockChartsTV! As part of that, Carl will be joining Erin in the trading room! If you want to attend the trading room LIVE and ask Carl questions, you can register HERE. Erin will still send out the recording link in Monday's DP Newsletter, but it will now be a slick recording produced by StockChartsTV. Join us LIVE Monday July 11th at Noon ET or watch the recording on StockChartsTV!
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Jul 5, 2022 08:55 AM
Meeting Recording Link
Access Passcode: July$5th
S&P 500 New 52-Week Highs/Lows: New Lows contracted and we saw a few more New Highs. The 10-DMA of the High-Low Differential is still rising which is bullish.
Climax* Analysis: There were no climactic readings today.
*A climax is a one-day event when market action generates very high readings in, primarily, breadth and volume indicators. We also include the VIX, watching for it to penetrate outside the Bollinger Band envelope. The vertical dotted lines mark climax days -- red for downside climaxes, and green for upside. Climaxes are at their core exhaustion events; however, at price pivots they may be initiating a change of trend.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
STOs finally turned around which is an improvement. We now have a very bullish 75% of stocks with rising momentum.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL to OVERSOLD.
The IT indicators are all rising and not at all overbought. Over 2/3rds of the SPX have PMO BUY signals. That can support a bear market rally.
PARTICIPATION and BIAS Assessment: The following chart objectively shows the depth and trend of participation in two time frames.
- Intermediate-Term - the Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
- Long-Term - the Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
The SCI ticked up slightly today, but the GCI fell somewhat. Not a surprise given there is a lower percentage of stocks above their 50/200-day EMAs than the GCI.
The short-term bias is bullish given there is a higher percentage of stocks above their 20/50-day EMAs than the SCI percentage.
The intermediate-term bias is bearish, but improving given the SCI is at a low 11.8% and is flat.
The long-term bias is bearish. The GCI is at a low 29.6% and there are fewer percentage of stocks above their 50/200-day EMAs. The GCI will not be able to improve until those percentages move higher.
CONCLUSION: The STOs turned up today which does suggest follow-through on today's rally. We do have jobs reports coming in the next few days and that could thwart this bear market rally. However, the IT indicators are firming and participation is healthy. Overall we remain cautiously bullish.
Erin is 45% exposed to the market.
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BITCOIN
Yesterday's comments still apply:
"Bitcoin is attempting to rally off support around $19,000. The PMO accelerated its move higher and Stochastics turned back up. The RSI is still very negative. It's hard to see, but this looks like a reverse pennant on a flagpole. That pattern implies a breakdown ahead so we aren't that optimistic this will turn into a strong rally. Most are becoming disillusioned by crypto."
INTEREST RATES
Rates are continuing to move in a declining trend offering Bonds an opportunity to rally further.
The Yield Curve Chart from StockCharts.com shows us the inversions taking place. The red line should move higher from left to right. Inversions are occurring where it moves downward.
10-YEAR T-BOND YIELD
$TNX bounced strongly today off support. Indicators are still mostly negative. The RSI is below net neutral (50) and the PMO is falling. Stochastics ticked up but they can be very twitchy. We expect to see overhead resistance holdout 3.0%, but this bounce is encouraging.
DOLLAR (UUP)
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: Yesterday's comments still apply:
"UUP gapped up out of a bearish rising wedge. This is a bullish conclusion to a bearish chart pattern and we find that especially bullish for the Dollar. The RSI is positive, the PMO is accelerating higher and Stochastics are about to move above 80. We expect the Dollar will continue to rise."
GOLD
IT Trend Model: NEUTRAL as of 5/3/2022
LT Trend Model: SELL as of 6/30/2022
GLD Daily Chart: Gold continues to tumble as the Dollar gains more strength. The RSI is oversold, but still falling. The PMO is accelerating lower, but is oversold. Stochastics are flat and haven't really made a move to the upside.
GOLD Daily Chart: Support at $1750 was obliterated today, but as we noted yesterday, $1725 did hold. This decline is ugly. Today's dive lower suggests Gold will move to $1675.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners lost strong support last week and were hurt significantly by the drop in Gold. We do not like this group given participation is nil."
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: The bearish head and shoulders is playing out as expected. The 200-day EMA is available for support, but the downside target of the pattern means a drop to $62.50 is likely. The PMO just moved into negative territory today. Stochastics and the RSI are flat and negative.
BONDS (TLT)
IT Trend Model: NEUTRALas of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yields bounced strongly today which put a halt to TLT's rally. Support is still holding, but today's decline formed a bearish engulfing candlestick. This came right after a bearish filled black candlestick. Overall yields remain in a declining trend, but if that is broken, Bonds will likely be in for a decline to support at $107.50.
Good Luck & Good Trading!
Erin Swenlin and Carl Swenlin
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically, the DecisionPoint Trend Model. They define the implied bias of the price index based upon moving average relationships, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
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DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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